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Do i need to declare a foreign unrealised bond

Potential client has been told by her F.A. that she needs to declare unrealised gain on foreign bond

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Is it correct that offshore bonds now need to be declared to HMRC even though they have not been realised.  I have a potential client with a foreign bond with no withdrawals and a potential gain of £20k.  The bond is owned by 3 people, if the bond needs to be declared do each of them have to declare their 1/3rd of the potential gain even though the bond is untouched.

If this is the case how are the gains declared, is there a specific form as I can see nothing on the self-assessment page.   

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By Tax Dragon
13th Dec 2021 11:59

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

See pages 6 and 7. And IFM13100 et seq. (And the regulations if you're feeling very brave.)

Be aware that sometimes reporting funds make their reports online and you may have to go and look for them.

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Replying to Tax Dragon:
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By Roella
13th Dec 2021 12:40

Thank you - now have the foreign pages up.

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By richard thomas
13th Dec 2021 12:10

I am answering this on the (I think justified) assumption that when you refer to "offshore bond" and "withdrawal" you must be referring to an offshore life insurance policy, not an offshore fund.

The answer to your query is that it depends on whether the policy is a personal portfolio bond (PPB) or not. If not, then the answer is "no", otherwise it is "yes". I suggest you read IPTM3600 ff. and (if brave) ss 515-526 ITTOIA and regs made under them to check, though the insurer should have told you.

The difference is that a PPB has "personal assets", usually for example shares in a company previously owned by the policyholder. PPBs were a good way of avoiding CGT on the sale of such companies. It would be unlikely for anyone to offer a PPB these days as the regime is punitive (an annual 15% charge on the premium paid). I suspect the FA is talking rubbish.

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By Tax Dragon
13th Dec 2021 12:13

That reading of the question makes much more sense.

I concur.

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By Roella
13th Dec 2021 12:25

Thank you for this, I will read up on your suggestions. Yes it is a PPB!

best regards

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By richard thomas
13th Dec 2021 12:42

Oh dear!

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Replying to Roella:
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By richard thomas
13th Dec 2021 12:52

The gain goes in Box 44 on page F6 of the foreign pages SA106. Read Helpsheet HS321 as well, the one official document that mentions PPBs.

The annual charge is not new, so the clients may have a failure to notify/incorrect return issue for back years.

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By Justin Bryant
13th Dec 2021 14:34

Can't you argue EU law freedoms defence (freedom of capital prior to 31.12.20) if offshore PPBs are treated less favorably than UK based PPBs (assuming that's the case of course)?

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Replying to Justin Bryant:
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By richard thomas
13th Dec 2021 15:24

No you can’t argue that because your assumption is wrong. In the Insurance Group in Financial Institutions Division of IR we were very observant of EC & EEA law, and so we put in no limitation on the location of the issuer.

As it happens the avoidance would not have been as effective with a UK issuer because of the CT on the inside build up. The same was theoretically true of Ireland which is why I had what became s 532 ITTOIA enacted.

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By Justin Bryant
14th Dec 2021 09:31

Noted (I guess that was something unrealised by me!)

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